In the private sector, the buyer and seller always have the power to walk away from the table, to forget the bargain and move on. The buyer can usually find another seller and vice-versa.
Free will and self-interest allows parties to find one another and construct an arrangement that is mutually beneficial.
Unfortunately, that is not always the case with the federal government, at least it doesn’t seem to apply now as the country steams toward a fiscal cliff of automatic tax increases and draconian budget cuts that are likely to plunge the country into another recession.
President Obama, fresh off his re-election, wants $1.6 trillion in new revenue, with the biggest chunk of that coming from raising the marginal rates for the top two percent of Americans. He also wants another $50 billion in new stimulus spending and $400 billion in unspecified future spending cuts.
Republicans want to keep all the Bush tax cuts in place, find new revenue by closing tax loopholes and capping deductions and make deeper cuts in entitlement spending.
So far, common ground appears to be in short supply.
Some voices on each side suggest that going off the fiscal cliff is now inevitable, and perhaps even preferable than taking a bad deal, but for whom?
These two sides have only each other to negotiate with. House Speaker John Boehner can’t call another President and President Obama must deal with the Republicans from this House of Representatives.
A walk-away leaves the American people twisting in the wind, adding to the uncertainty that Washington has created.
Unfortunately, I have no solution, no Grand Bargain that both sides can agree to. On one hand, it’s unrealistic to think that Republicans are going to cave on the fundamental conservative principle of lower taxes, while President Obama’s intention to raise taxes on high income earners has been clear for months.
But I know that it’s reasonable for Americans to expect a functional government, and that’s achieved through good faith bargaining. That requires both sides to meet and negotiate. It means one side presenting a legitimate proposal and the other side responding to that proposal.
It does not require that either side make a concession or agree to a proposal. However, if each side has a vested interest in reaching a deal, those things have a way of working themselves out.
You’ve heard a lot about who will get the political blame if we go over the fiscal cliff. That’s a big deal in Washington, but I suspect not so much across the country. Most folks are too busy trying to avoid their own personal fiscal cliffs to obsess about the nuance of political accusations.
We’re in this mess because of Washington’s inability to carry out a basic function: collect the taxes and spend accordingly. We’ve fought wars we haven’t paid for and over-promised the size of the social safety net.
Washington has rigged the Ponzi scheme of spending for so long that, when faced with a fiscal cliff, it can’t, or won’t, find a way out.